The future of Commerce – The Luck of Physical and e. shop synergy

Today, trade faces two challenges – the electronic space and the Z generation. Currently, these two challenges still do not impact Lithuania – the Z generation of purchasing power is still developing, and the electronic trade grows in the countries of Western Europe, especially in the United Kingdom. In the Baltic States, electronic trade volumes are growing every year, but this does not have a significant impact on the region for the active shopping centers development projects, as underlined in the “Newsec Property Outlook“ Real Estate presentation.

Jūratė Gaspariūnienė, Head of Retail Operations for the International Real Estate (RE) Consultancy company “Newsec”, points out that the e-commerce boom has not yet reached Lithuania, as well as in the entire Baltic region and Poland, but the its volume is growing steadily.

“In Lithuania an up to 30% annual growth of e-commerce is recorded, but the overall market share of the Baltic States for e-commerce is still very modest and only slightly above 3%. For comparison, in 2018 European average for the first half was 8%. It is planned that the sales of non-food products in non-physical stores will increase by 11.9% annually over the next five years, reaching 21% of the total retail sales volume by 2022. Meanwhile, the volume of food trade in Europe is much more modest – 4.1%”, – says J. Gaspariūnienė.

Lithuanian cities are too small

Gediminas Balnis, Chairman of the Board of the “Amber Food” Group, who participated in the event, explains that the small growth of food trade online is determined by the small size of Lithuanian cities, evaluated on the European scale.

“Food delivery to home service is the fastest growing in the big cities – people in the big cities are more likely to choose food delivery to home service, as it helps save time spent in supermarkets and in traffic. For example, food delivery to home in Moscow can make up to 50% of restaurants turnover. I believe that if Lithuanians had to drive to work every day for an hour each way, then not only food but also other goods would be more actively ordered online”, – explains G. Balnis.

Growing shopping centers

Despite the growing trade in electronic space, Rimantas Perveneckas, Head of the APB “Apranga” Group stresses the fact that the sale of clothing remains an exception: “The forecast that clothing and footwear sector will move to the Internet in the near future was misleading. We noticed that the footwear and clothing stores spaces in contrary are expanding, which also results in the opening of new business centers in all the Baltic States”.

According to R. Perveneckas, smaller shopping centers will be more likely to suffer losses, and more new large shopping centers will be opened, as the clothing and footwear shops prefer ever larger spaces.

The opening of two shopping centers in Vilnius was announced in 2018. It is planned to build a shopping center “Vilnius Outlet” in the Capital’s Pilaitė district, which amount to 60 000 square meters. An idea revived to erect a second Capital’s shopping and entertainment center “Akropolis” until 2021, which would be located near Vingis park, which will offer a renting space of 70 000 square meters.

Smartphones play an increasingly important role in the sales cycle

“The role of the smartphone plays an increasingly important role for the present and the next generation – the Z-generation (70%) representatives, as the main tool for decision-making, calls the smartphone. They want to always be accessible online, therefore they use smartphones. These needs also change the competitive environment – while the younger generation still have the need to see and touch a product live, they still then tend to check the price of the product on their smartphones online and do not hesitate to order the same product there if the offer is found more attractive. According to recent European studies, this tendency was also significant in the current adult category – as many as 59% do such checks”, – observes J. Gaspariūnienė.

The solution is omnichannel

“Newsec” expert observes that the integration of online and physical store spaces is most effective solution in increasing the volume of sales, as this solution helps meet the needs of both young and older generation made purchases. Use of information from different channels for new business cycles. R. Pravenckas also seconds this idea by arguing that linking physical and electronic stores to one channel will be the most successful option in the future.

“The biggest pace and moods of e-commerce growth in Europe are dictated by the United Kingdom and Germany. The trading experience of these markets shows that the business solution for the growing e-commerce is omnichannel – the integration of online and physical store spaces”, – explains J. Gaspariūnienė at “Newsec Property Outlook” Real Estate Market Review Conference.

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